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# Densmore Company, known for its luxury goods, has recently

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Densmore Company, known for its luxury goods, has recently [#permalink]

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31 Jan 2013, 11:44
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Densmore Company, known for its luxury goods, has recently expanded its business and has begun marketing to consumers who, when surveyed, have stated that they usually purchase products priced at or below the prevailing market rate. To attract these customers' business, Densmore is advertising that its new, more inexpensive product lines, already priced lower than its top-selling luxury items, are on sale for 30% off. The Densmore marketing staff has determined that advertising its discounted prices is the most effective way of attracting potential customers.

Which of the following would be most helpful in evaluating the likelihood that Densmore's plan will achieve its goal?

A) How the profit margins on the new product lines compare to those for the top selling luxury items.

B) What percentage of existing Densmore customers are included in the consumer survey.

C) How many consumers surveyed are existing Densmore customers.

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign.

E) How the sale price compare to those for comparable, non-discounted products.
[Reveal] Spoiler: OA

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Re: Densmore Company, known for its luxury goods, has recently [#permalink]

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01 Feb 2013, 09:34
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CharuKapoor wrote:
Densmore Company, known for its luxury goods, has recently expanded its business and has begun marketing to consumers who, when surveyed, have stated that they usually purchase products priced at or below the prevailing market rate. To attract these customers' business, Densmore is advertising that its new, more inexpensive product lines, already priced lower than its top-selling luxury items, are on sale for 30% off. The Densmore marketing staff has determined that advertising its discounted prices is the most effective way of attracting potential customers.

Which of the following would be most helpful in evaluating the likelihood that Densmore's plan will achieve its goal?

A) How the profit margins on the new product lines compare to those for the top selling luxury items.

B) What percentage of existing Densmore customers are included in the consumer survey.

C) How many consumers surveyed are existing Densmore customers.

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign.

E) How the sale price compare to those for comparable, non-discounted products.

hey hii.
The conclusion is : "The Densmore marketing staff has determined that advertising its discounted prices is the most effective way of attracting potential customers."
The marketing staff based its conclusion on "Densmore is advertising that its new, more inexpensive product lines, already priced lower than its top-selling luxury items, are on sale for 30% off".
Now let me explain via an example. Consider two car brands, namely Bugatti and Peugeot. Bugatti costs $200,000 and Peugeot costs around$65,000. As we all know Bugatti is quite expensive, in fact for me it is cause I am not a millionaire, Bugatti cars are not affordable to many customers. To expand its customer base, Bugatti decides to introduce a cheaper model, suppose at $175,000. Moreover, Bugatti is also providing a discount of 30% on the sale price of its newer model. Suppose that price is around$140,000.
Now my question is, can we expect Bugatti to attract potential customers. NO! because still there is a huge price difference between the Peugeot and Bugatti's new model. Even if Bugatti advertises its discounted price, no way it is going to attract potential customers.
The matter of concern is the price of the brand after discount.
For me, its straight E.
When I read this question, the first thing that struck my mind was the basis on which the marketing staff based its conclusion. I knew what I was looking for and E was available.
Let me know, if any more clarification is required.
Regards.
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Re: Densmore Company, known for its luxury goods, has recently [#permalink]

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18 Jul 2014, 21:50
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Re: Densmore Company, known for its luxury goods, has recently [#permalink]

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11 Sep 2015, 07:25
Hello from the GMAT Club VerbalBot!

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Re: Densmore Company, known for its luxury goods, has recently [#permalink]

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13 Nov 2015, 08:41
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Marcab nails it here already!

• Densmore Company has recently expanded its business to consumers who purchase products priced at or below the prevailing market rate.
• therefore Densmore is advertising that its new, more inexpensive product lines, already priced lower than its top-selling luxury items, are on sale for 30% off.
• The Densmore marketing staff expects its plan to be most effective.

Which of the following would be most helpful in evaluating the likelihood that Densmore's plan will achieve its goal?

A) How the profit margins on the new product lines compare to those for the top selling luxury items............these consumers are not bothered about luxury items so they wont buy simply by some reduction compared to luxury items.

B) What percentage of existing Densmore customers are included in the consumer survey............Survey can only indicate but note determine effectiveness of the plan. D's customers are those who purchase luxury items and their % cannot guarantee info regarding anything to consumers who purchase products priced at or below the prevailing market rate.

C) How many consumers surveyed are existing Densmore customers..............same as B. Useless info

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign.
We have a section of consumers who purchase products priced at or below the prevailing market rate. but this bargain hunting is the keyword that misled me here. I selected this choice because of it. Bargain hunters are those who look for discounts but consumers who purchase products priced at or below the prevailing market rate may find the price too high even after the discount. So this cannot be the answer.

E) How the sale price compare to those for comparable, non-discounted products.
final price of the discounted product in comparison with non-discounted products which were purchased by these customers prior to this sale promotion matters and decides on the sale finally
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Re: Densmore Company, known for its luxury goods, has recently   [#permalink] 13 Nov 2015, 08:41
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# Densmore Company, known for its luxury goods, has recently

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